What is a homeowner loan?

A homeowner loan is usually a secured loan that offers you the potential to borrow larger sums than a traditional unsecured personal loan. You will generally find that you will get a lower interest rate than with unsecured borrowing but you are usually required to use your home as a guarantee on your repayments. 

There are several secured loan providers in the Uk each of whom will have different approaches to how they treat the credit history of potential borrowers. The general rule of thumb is the poorer your credit profile the more equity will be required in your property against which to secure against. It is likely also that the APR of the loan in these cases will be higher. Rates on secured loans usually start at around 7% for loans of £20,000 or more to customers with a good credit profile and go up to circa 30% for poorer credit loans.   

Homeowner loans can be useful for many different reasons and lenders typically take a more flexible stance on what they will allow you to use the loan proceeds for because they have ultimate security in your property. It may be for consolidating smaller debts into a single affordable loan with one monthly repayment, home improvements or even to inject funds into your business.

You should always think carefully before taking out a homeowner loan as you risk losing your home if you cannot meet your payments, no different in this case to not paying your mortgage. Make sure also if you are looking for a sum of between £5,000 and £15,000 that you have already considered the unsecured loan options available to you in the marketplace. It is also likely in some cases that your mortgage company could be the answer to your fund raising requirements so do look at this option as well.

The credit crunch with its Bad debt levels and rising money costs have impacted on the unsecured market over recent times but we are seeing a gradual shift. One or two lenders are looking at offering niche unsecured products geared specifically towards home owners. These products will be aimed at home owners with a good credit profile and will enable them to borrow on an unsecured basis but at much higher levels than the mainstream institutions work at. The loans could be used for topping up a house purchase for example where little or negative equity exists.

As with all borrowing be sure to weigh up what you require the money for, how much you actually need and then whether you can afford the repayments. Make sure you have researched the market fully and beware the brokers who charge high up front fees. We only work with reputable lenders and do not charge up front fees on our homeowner loans.